Carrots are better than sticks

I came across an interesting article in New Scientist today where research into the “common goods” game provides insight into how collaboration between different individuals in enhanced by incentives rather than hygiene factors. We all experience “common goods” in some share or form, for example when we make use of public health services. The notion behind them is that everyone contributes a tiny amount and makes use of the good when needed. Typically though, certain advantages are tempted to “cheat” and try to consume the good without contributing.

Common perception is that this behaviour can be minimised by punishing the offenders, but the article on New Scientist suggests that providing rewards to those who DO contribute (the mythical carrot) is a more effective reinforcement mechanism. The theory behind is is linked to the idea of differential cost. A small effort contributed by an individual to a system can have a large value for another individual, which gives a large increase in overall utility. For example, my dedicating 30 minutes to help a neighbour move his bell tv out of his car into his living room is a pretty low cost; but if he didn’t have the help available, he would have had to pay movers to do this for him; a significant cost by comparison.